CA Auto Insurance Program Participation Increases

The insurance commissioner of the state of California has announced a significant increase in enrollment in the state's Low Cost Automobile Insurance Program for the 2009 year. According to Insurance Commissioner Steve Poizner, the increase for 2009 over the previous year was just under 19 percent. Tough economic conditions throughout the state and aggressive marketing on behalf of the program were credited for the increase [1].

Low Cost Automobile Insurance Program

The California Low Cost Automobile Insurance Program is an initiative that was first established in 1999, and has been available statewide since 2007. Its intent is to help low income residents across the state to better afford auto insurance protection. The state of California requires auto liability insurance for all drivers, as do most states across the country. However, California has long battled a serious problem with uninsured motorists out on state roads. Part of the intent of the program is to reduce the number of uninsured motorists on the road. The goal is to give low income car owners the chance to enroll in coverage to legally insure their vehicle while saving them some money.

In the state of California, every driver must carry at least an auto liability insurance policy. The state uses the split form liability plan, which divides a policy holder's liability insurance into three distinct categories. Each category or section of the policy handles a specific type of liability claims. The three parts of a California split form liability policy are bodily injury per person, bodily injury per accident, and property damage per accident.Bodily injury per person liability insurance gives the covered policy holder funds to pay for medical costs related to at fault accidents that are borne by a single injured person involved in the accident outside the covered vehicle. That injured party could be another driver or passenger of another vehicle, a bicyclist or a pedestrian. The idea behind California liability insurance is to save the covered policy holder from personally having to bear the costs associated with an accident for which the policy holder is held responsible.

Bodily injury per accident liability insurance protects the covered policy holder from costs that result from multiple injuries in these at fault accident scenarios. For example, if the other car had a few passengers, and they all required medical treatment, the cost of such treatment would come out of this part of your liability policy.

Property damage liability coverage takes care of the financial cost of dealing with any damage the covered policy holder does to other people's property. This property protection is not just limited to cars. If you run into a building or some other property, your liability protection for personal property damage would pay for the cost of repairing or replacing the damaged property. As with all parts of a California split form liability policy, coverage for damages is limited to the limits of the policy, less deductible.

As part of the California Low Cost Automobile Insurance Program, drivers who enroll in the program are signed on for liability auto insurance with reduced minimum limits of coverage versus the normal state standards. A CLCA liability policy is a 10/20/3 policy, with each of three numbers representing in thousands of dollars the levels of coverage in the split form liability policies carried by CLCA enrollees. This means each policy holder gets $10,000 in per person bodily injury liability coverage, $20,000 in per accident bodily injury and $3,000 in per accident property damage. For an additional cost, enrollees can also add to their policies with $1,000 in personal medical payments coverage, $10,000 in uninsured motorist bodily injury per person and $20,000 in uninsured motorist bodily injury per accident [1].

Eligibility for Low Cost Program

For California drivers to become eligible for the Low Cost Automobile Insurance Program, they must meet certain minimum age and driving experience standards, as well as minimum expectations with regard to their previous driving record. Enrollees must be at least 19 years old at the time of initial enrollment in the CLCA program, with at least three years of continuous licensure in the state and a good driving record. To be considered a "good" driver as it pertains to the CLCA program, a driver must have no more than one point on their California license, and have been involved in no more than one at fault auto accident over the past three years. In addition, eligible drivers cannot have been involved in any accidents over the past three years leading to injury or death. In addition, to be eligible a driver cannot have any misdemeanor or felony convictions for violating the state vehicle code. They cannot insure a car valued at more than $20,000, and they must meet income limits based on the size of their household [1].

The upper income limits for eligibility are equivalent to 250 percent of the federal poverty level. For a family of four people, this equals out to $55,125. Premium rates for the CLCA program are set by county, but they are standardized and insurers cannot charge more than the set county rates for a policy.

Auto Program Still Under Debate

On February 1, California Assembly member Dave Jones (D-Sacramento) announced Assembly Bill 1597, which would extend the Low Cost Automobile Insurance Program through 2016. Currently, the program is set to expire at the end of this year unless a new law is passed extending it. In 2009, a bill went to the desk of California Gov. Arnold Schwarzenegger, but he chose to veto it, although he did welcome assembly members to come up with a revised measure for him to look at this year.

Jones decided to present the new bill because he feels it is important to keep the program alive, especially given the tough economic circumstances being felt in California along with the rest of the country. He said, "Extending the low cost auto insurance program is vitally important in these tough economic times. Low income drivers with good driving records deserve the chance to obtain affordable auto insurance."

The future of the California Low Cost Automobile Insurance program is still up in the air. Proponents of the CLCA program believe it gives a great opportunity to low income residents in the state of California for getting into a liability policy they can afford. They feel that extending the program can only help this demographic. But those in opposition or skeptics of the CLCA program in California have questioned whether it is really making a difference in the state's uninsured driver statistics. They also tend to believe the minimum liability insurance levels set up by the CLCA program are too low to be really effective for enrollees.

It remains uncertain at this point whether the Low Cost Automobile Insurance Program will survive beyond the close of 2010. However, there is certainly some support behind extending the program, as evidenced by the assembly passing the bill vetoed by the governor, and by Jones' new bill introduced this month. The increased participation by California drivers over the past year seems to suggest widespread public support.